nep-eec New Economics Papers
on European Economics
Issue of 2015‒04‒11
twenty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The impact of European integration on institutional development By Schönfelder, Nina; Wagner, Helmut
  2. The Protestant Fiscal Ethic: Religious Confession and Euro Skepticism in Germany By Adrian Chadi; Matthias Krapf
  3. A diverging Europe on the edge: The independent Annual Growth Survey 2015 By Xavier Timbeau
  4. Implementing the Golden Rule for Public Investment in Europe: Safeguarding Public Investment and Supporting the Recovery By Achim Truger
  5. Monetary Union with a Single Currency and Imperfect Credit Market Integration By Vincent Bignon; Régis Breton; Mariana Rojas Breu
  6. Unpleasant debt dynamics: Can fiscal consolidations raise debt ratios? By Gabriela Lopes de Castro; Ricardo Mourinho Félix; Paulo Júlio; José R. Maria
  7. Insurance companies' trading behaviour during the European Sovereign debt crisis: Flight home or flight to quality? By Melle Bijlsma; Robert Vermeulen
  9. Business cycle synchronization: A regional perspective By Krzysztof Beck
  10. The influence of clusters on economic development. A comparative analysis of cluster policy in the European Union and Japan By Katarzyna Cheba
  11. Do fiscal councils impact fiscal performance? By Giovanni Coletta; Carmen Graziano; Giancarlo Infantino
  12. The design of fiscal consolidation measures in the European Union: Distributional effects and implications for macroeconomic recovery By Figari, Francesco; Paulus, Alari; Sutherland, Holly
  13. Bubble Economics and Structural Change: The Cases of Spain and France Compared By Agnese, Pablo; Hromcová, Jana
  14. Monitoring the evolution of income poverty and real incomes over time By A.B. Atkinson; Anne-Catherine Guio; Eric Marlier
  15. Determinants of intra-distribution dynamics in European regions: An empirical assessment of the role of structural intervention By Enrico Fabrizi; Gianni Guastella; Stefano Marta; Francesco Timpano
  16. Demographic Structure and Macroeconomic Trends By Yunus Aksoy; Henrique S. Basso; Tobias Grasl; Ron P. Smith
  17. The 2013 update of the OECD's database on product market regulation: Policy insights for OECD and non-OECD countries By Isabell Koske; Isabelle Wanner; Rosamaria Bitetti; Omar Barbiero
  18. Labor market regulations and outcomes in Sweden : a comparative analysis of recent trends By Ulku,Hulya; Muzi,Silvia
  19. Nowcasting unemployment rates with Google searches: Evidence from the Visegrad Group countries By Pavlicek, Jaroslav; Kristoufek, Ladislav
  20. Welfare state adjustment to new social risks in the post-crisis scenario. A review with focus on the social investment perspective By Thomas Leoni

  1. By: Schönfelder, Nina; Wagner, Helmut
    Abstract: This paper investigates the speed of institutional development induced by European integration. The hypotheses are the following. The prospect for European countries to join the EU disposes them to strengthen their institutions, so that the speed of institutional development is high. Furthermore, EU Member States preparing for the introduction of the euro have incentives to develop their institutions, but the speed of institutional development is much lower. As soon as Member States introduce the euro, institutional development grinds to a halt, or is even reversed, as there could be incentives to undo reforms. To test these hypotheses, we estimate a dynamic panel data model, in which the institutional development is measured as positive changes in Worldwide Governance Indicators (WGIs). The WGIs are explained by the “status” of the European countries (i.e. being a member of the euro area, a Member State of the EU preparing to adopt the euro, an acceding country, a candidate country, a potential candidate country or none of the above) and additional controls. To sum up the findings, we can confirm a positive effect of prospective EU membership. Being a Member State does not influence the institutional development path. However, for members of the euro area, there is robust evidence for institutional deterioration in one particular area, namely control of corruption.
    Keywords: Institutional development, transition economies, European integration, euro area, panel data
    JEL: F55 O43
    Date: 2015–03–03
  2. By: Adrian Chadi; Matthias Krapf
    Abstract: During the European sovereign debt crisis, most countries that ran into fiscal trouble had Catholic majorities, whereas countries with Protestant majorities were able to avoid fiscal problems. Survey data show that, within Germany, views on the euro differ between Protestants and Non-Protestants, too. Among Protestants, concerns about the euro have, compared to Non-Protestants, increased during the crisis, and significantly reduce their subjective wellbeing only. We use the timing of survey interviews and news events in 2011 to account for the endogeneity of euro concerns. Emphasis on moral hazard concerns in Protestant theology may, thus, still shape economic preferences.
    Keywords: Protestantism; euro crisis; subjective wellbeing; media coverage
    JEL: E00 I31 L82 Z12
    Date: 2015–03
  3. By: Xavier Timbeau (OFCE)
    Abstract: This is the third independent Annual Growth Survey (iAGS), each a response to the European Commission's AGS, and we have to take note sadly of the continuation of the crisis. Response to the euro sovereign debt crisis has been substantial, but we analyse that it was not sufficient to give a strong enough momentum to the euro area economy in order lastingly to exit the recession it entered 6 years ago. Failing to exit the crisis brings many poisons, economic, social, and political. Unemployment is at high levels, inequality is rising, and convergence between European regions that was once the rule is no longer occurring. Pressure on wages and the need to restore internal balances between countries fuels deflation. Debt deleveraging, private or public, is far from accomplished and the prospect of falling prices may be the mechanism by which stagnation is perpetuated. The European project of a prosperous and inclusive society is giing to sink if we fail to rebound.
    Date: 2015–02
  4. By: Achim Truger
    Abstract: Most parts of the Euro area have seen seven years of deep economic crisis. The strategy of tightening the fiscal constraints of the SGP has driven many member states into austerity. In contrast, the golden rule of public investment proposed in this study would be one important element of the necessary institutional reform. The rule is widely accepted in traditional public finance and would allow financing net public investment by government deficits thus promoting intergenerational fairness as well as economic growth. A pragmatic version focusing on net public investment as defined in the national accounts minus military expenditures plus investment grants for the private sector could quickly be implemented. Net public investment should be deducted from the relevant deficit measures of the Stability and Growth Pact and the fiscal compact. Over time it could be technically and statistically refined and potentially include other – more intangible – types of investment like education expenditures. As political implementation would probably take some time, the golden rule would have to be complemented by expansionary fiscal policy to provide the urgently needed boost to the European economy in the short term. This could be done by a short term European Investment Programme similar to the 2008 European Economic Recovery Programme during the Great Recession. Such a programme could also allow for investment needs beyond the narrow national accounts definition to contribute to public investment in a broader sense, e.g. for expenditure related to the currently neglected Europe 2020 goals such as social inclusion.
    Keywords: Public Investment, Golden Rule, Reform of the Stability and Growth Pact, Fiscal Policy and Macroeconomic Performance, Austerity
    JEL: E61 E62 E65 H54 H62
    Date: 2015–03
  5. By: Vincent Bignon; Régis Breton; Mariana Rojas Breu
    Abstract: This paper shows that currency arrangements impact on credit available through default incentives. To this end we build a symmetric two-country model with money and imperfect credit market integration. With the Euro Area context in mind, we capture differences in credit market integration by variations in the cost for banks to grant credit for cross-border purchases. We show that for a high enough level of this cost, currency integration may magnify default incentives, leading to more stringent credit rationing and lower welfare than in a regime of two currencies. The integration of credit markets restores the optimality of the currency union.
    Keywords: banks, currency union, monetary union, credit, default
    JEL: E50 F3 G21
    Date: 2015–03
  6. By: Gabriela Lopes de Castro; Ricardo Mourinho Félix; Paulo Júlio; José R. Maria
    Abstract: Using PESSOA, a medium-scale DSGE model for a small euro-area economy, we evaluate how scal adjustments impact short- and medium-term debt dynamics and output for alternative policy options, and budgetary and economic conditions. Fiscal djustments may increase the public debt-to-GDP ratio in the short run, even forconsolidations carried out in normal times in economies characterized by moderateindebtedness levels. Financial turmoils and hikes in the nationwide risk premia, coupledwith high indebtedness levels and sti scal measures, boost the output costs ofscal consolidations and severely aect their eectiveness in bringing the public debtto-GDP ratio down in the short term. In the medium run credible scal adjustments entail a decline in the public debt ratio, though at potentially very large output losseswhen carried out under unfavorable budgetary and economic conditions.
    JEL: E12 E30 E62 H60
    Date: 2015
  7. By: Melle Bijlsma; Robert Vermeulen
    Abstract: This paper empirically investigates if insurers exhibited a flight home or flight to quality during the European sovereign debt crisis and other stages of the financial crisis. Our dataset consists of over sixty insurance companies, for which we separately observe trading behaviour and portfolio revaluations at a quarterly frequency during 2006-2013. When explaining insurers' trading behaviour we explicitly control for country risk and momentum strategies. The results show that insurers exhibited a flight to quality during the European sovereign debt crisis, while we find no evidence of a flight home. The observed flight to quality was not present before the European sovereign debt crisis and disappeared after ECB chairman Draghi's speech mid-2012.
    Keywords: international portfolio choice; insurance companies; sovereign debt crisis; flight to quality; flight home
    JEL: G11 G22
    Date: 2015–03
  8. By: Pami Dua (Departments of Economics, Delhi School of Economics, University of Delhi, India); Divya Tuteja (Departments of Economics, Delhi School of Economics, University of Delhi, India)
    Abstract: We study the impact of recent crisis episodes viz. the global recession of 2008-09 and the Eurozone debt crisis of 2010-12 on the Emerging Market Economies (EMEs) of China and India. Macroeconomic indicators suggest that both China and India were impacted by the crises. We focus on the trade channel of transmission of the crises i.e. on exports from China and India to the U.S. and Euro Area respectively. This study finds that the exports from China and India to both the destinations were affected as a result of the crisis episodes with major exporting sectors of the two economies displaying negative rates of growth. Further, Markovswitching autoregressive models are utilized to examine the regimes in the growth rate of total value of exports to the U.S. and Eurozone. We find presence of slowdown and pickup regimes in the export growth rates. Furthermore, Markov-switching regression results suggest that the economic activity levels in the U.S. and the Eurozone significantly and positively affect the exports to these destinations from China and India across high as well as low export growth rate regimes. As a result, a dampening of the economic activity in the U.S. and Eurozone in the wake of the crises led to a reduction in the rate of growth of exports from China and India due to a fall in the demand for exports.
    Keywords: Global Recession, Eurozone Debt crisis, China, India, Exports, Trade Channel
    JEL: C22 F14 G01
    Date: 2015–04
  9. By: Krzysztof Beck (Uczelnia £azarskiego w Warszawie)
    Abstract: Turmoil in euro area once more forces EU authorities to rethink future of further monetary integration. One of the most commonly used criterions for successful monetary in contemporary research is business cycle synchronization (BCS). Though BCS has been vastly described at country level, not as much attention has been put on the degree of BSC at regional level. Topic is important for 2 main reasons. The first is that determining degree of BCS at regional level can help in assessment of monetary policy effectiveness at country level, as well as giving point of reference for evaluation of perspective costs of participation in monetary union. The second is that there is theoretical dispute within the optimum currency areas literature between ‘European Commission’ and “Krugman” view that can be resolve a great deal trough regional analysis. In order to assess BCS in EU Hodrick-Prescott, as well as Christiano and Fitzgerald filter to time series of real GDP for 24 countries, 82 NUTS 1, 242 NUTS 2 and 1264 NUTS 3 regions over the period of 1998-2010. Data was later used to create bilateral measures of BSC, which gave 276 observations on country level, 3321 on NUTS 1, 29161 on NUTS 2 and 798216 on NUTS 3 level. Results of the analysis support “European Commission” view and show very high degree of BSC within EU countries. Country level analysis also reveals that within the EU there exist group of countries that could form effectively working monetary union based on BCS criterion.
    Keywords: business cycle synchronization, regional economics, optimum currency area theory, Hodrick-Prescott filter, European integration
    JEL: E32 E50 F44 R10
    Date: 2015–04
  10. By: Katarzyna Cheba (West Pomeranian University of Technology in Szczecin)
    Abstract: The development of clusters seems to be a natural consequence of the observed trends in the global economy. The increased interest in the creation and development of clusters can also be seen in most of the countries of the European Union, however, the experience of EU countries in this field is different. In addition to strong clusters with a long tradition, new clusters are created with much lower potential. Clusters compatible with the most important EU documents are to play the role of organizations supporting regional development and ensuring the growth of innovation of the European Union in the new programming period. Japanese economy is based on the important role of clusters in this area, which along with the US and the European Union is among the largest economies in the world. The experience of Japan in this area is much longer. A lot of still functioning clusters were created in this country in the XVII and XVIII centuries. The aim of this study is a comparative analysis of the socio-economic situation of the European Union and Japan, with special emphasis on the role, that clusters play in those economies. The result of the analysis is to identify the factors that allow for the effective operation of enterprises within created cluster structures. The analysis of Japan's experience in this area is a valuable source of information for policy guidelines developed to support clusters in the EU.
    Keywords: cluster, effectiveness of clusters, regional development, value of regions
    JEL: O12 O57
    Date: 2015–04
  11. By: Giovanni Coletta; Carmen Graziano; Giancarlo Infantino
    Abstract: The lack of budget transparency and projections accuracy have been among the determinants of the last four decades high deficit and debt, as the recent 2008-2009 economic crisis has highlighted. In order to improve fiscal policy process and budget transparency, the European Union (EU) stated more stringent fiscal rules monitored by Independent Fiscal Bodies, that have the capacity to “tie the hands” of policymakers tempted by deviations from socially optimal choices according to the academic circles. The present paper aims at empirically verifying if Fiscal Councils (FCs) in Europe (as a complement or substitute for the Fiscal Rules - FRs) have an impact on Governments’ fiscal decisions and if this impact exists and is positive which feature of their functioning is relevant for their effectiveness. The data elaborated with a panel regression model are the actual and foreseen (one year ahead) public finance and economic data of eleven European Countries1. The yearly planned change of the Cyclically Adjusted Budget Balance (CAB) 2 is interpreted as the discretionary fiscal policy and data about FCs and FRs are those of the European Commission (EC) Database on Fiscal Governance (data on fiscal institutions of the European database were opportunely adjusted, controlled and rebuilt for the missing years to construct the Fiscal Council Index - FCI). This work (with the caveats related to the used data) provides empirical support for the hypothesis of a positive impact of FCs on fiscal performance; leading to the conclusion that if there are clear and strong FRs, the presence of fiscal institutions with solid basis in national institutional framework (strong legal basis) could positively affect political decisions.
    Keywords: Financial crisis, fiscal policy, fiscal institutions, stability programs and convergence programs
    JEL: C33 E61 E62 H68
    Date: 2015–03
  12. By: Figari, Francesco; Paulus, Alari; Sutherland, Holly
    Abstract: The financial and economic crisis which started in the late 2000s and the fiscal consolidation measures to counter the subsequent government budget deficits have an impact on household income distribution and macroeconomic recovery. We consider the austerity measures in relation to their distributional impact and the potential channels through which fiscal consolidation can affect economic growth. We find notable variation in the size, composition and effects of fiscal consolidation. Richer households tend to bear a greater burden in most countries but spending cuts are more likely to affect liquidity constrained households casting doubts over previous findings in the macro-economic literature about the effectiveness of such measures. This suggests the need to consider more disaggregated evidence to reach robust policy conclusions.
    Date: 2015–03–27
  13. By: Agnese, Pablo (FH Düsseldorf); Hromcová, Jana (Universitat Autònoma de Barcelona)
    Abstract: This paper delves into the recent events that led to the formation of the housing bubble in Spain and the resulting structural change that is arguably needed to put the economy back into the right track. For this purpose we calibrate a model with different equilibria descriptive of the labor markets in Spain and France, where the unemployment rates went from the same initial spot to very different levels. In addition to this, we run two counterfactual analyses that throw some more light on the performance of the Spanish labor market and the Spanish housing bubble. Our results suggest that the unemployment rate in Spain has jumped to much higher levels while switching between equilibria or, what is the same, because of structural change. Moreover, our counterfactuals indicate that, first, the Spanish flexibilization reform has fallen short of its own goals and, second, there has been an important misdirection of resources into the construction industry mainly fueled by excessively low real interest rates.
    Keywords: structural change, bubble, unemployment, interest rate, productivity
    JEL: J64 O57
    Date: 2015–03
  14. By: A.B. Atkinson; Anne-Catherine Guio; Eric Marlier
    Abstract: This paper brings together two approaches to the monitoring of household living standards: the macro-economic (national accounts) analysis of aggregates and the social indicators based on household microdata (European Union Statistics on Income and Living Conditions [EU-SILC]). Both are essential. The national accounts are necessary to provide an overall perspective; the distributional data in EU-SILC are necessary to measure income poverty. The progress, or lack of progress, in reducing income poverty has to be seen in relation to what is happening to the level of real incomes. We begin with the EU-SILC-based headline at-risk-of-poverty indicator, and then consider its relation to the level of household real income as presented in the national accounts. Moving step by step, we seek to identify the reasons for differences between EU-SILC and national accounts measures of real incomes. From this, we make a number of recommendations about possible improvements in the underlying data and in the construction of the social indicators. The substantive results help illuminate the differing experience of the pre-crisis period 2005 to 2008 and the subsequent three year period 2008 to 2011 (income reference years).
    Keywords: poverty, inequality, national accounts, social indicators
    JEL: D31
    Date: 2015–03
  15. By: Enrico Fabrizi (DISCE, Università Cattolica); Gianni Guastella (DISCE, Università Cattolica); Stefano Marta (UN FAO); Francesco Timpano (DISCE, Università Cattolica)
    Abstract: This paper looks at the dynamic of income distribution in European regions and attempts to relate movements within the distribution to the regional structural characteristics and the support of Cohesion Policy (CP). Empirical evidence highlights two main features of regional development. A generally lagging periphery with high growth rates on the one hand and a set of leading regions facing the challenge of global competitiveness on the other. There is evidence that CP support advanced economic development in lagging and peripheral regions, hence contributing to the “convergence objective”. Nonetheless, effective catch-up remains circumscribed to certain very few regions. Contrarily, CP support has failed to stimulate growth potential in leading regions, failing to strengthen EU competitiveness. Evidence presented in this paper provides useful insights for the current debate about the reshaping of EU cohesion policy toward a more place-based approach.
    Keywords: Regional development, European Unione,distribution dynamics, multinomial logisticregression, cohesion policy, place-based territorial policies.
    JEL: Q47 R11
    Date: 2014–07
  16. By: Yunus Aksoy (Department of Economics, Mathematics & Statistics, Birkbeck); Henrique S. Basso (Banco de España); Tobias Grasl (Department of Economics, Mathematics & Statistics, Birkbeck); Ron P. Smith (Department of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: We analyse both empirically and theoretically the effects of changes in demographic structure on the macroeconomy, looking particular at their impact to medium-term trends. Our empirical exercise examines the impact of the proportion of the population in each age group, on growth, savings, investment, hours, interest rates and inflation using a panel VAR estimated from data for 20 OECD economies for the period 1970-2007. This flexible dynamic structure with interactions among the main variables allows us to estimate both the direct impact of demographic structure and their feedback effects. Our estimates confirm the importance of age structure, with young and old dependants having a negative impact on most macroeconomic variables while workers contribute positively. Our theoretical framework incorporates demographic heterogeneity and endogenous productivity, allowing us to study the medium-term interaction of demographic changes and savings, investment, and innovation decisions. Theoretical simulations incorporating the changes in demographic structure experienced by many OECD countries in the past decades replicate well our empirical findings. The current trend of population aging and reduced fertility, expected to continue in the next decades, is found to be a strong force in reducing output growth and real interest rates across OECD countries.
    Keywords: Demographic changes, population age profile, medium-term, output growth, savings and investment.
    JEL: E32 J11
    Date: 2015–01
  17. By: Isabell Koske; Isabelle Wanner; Rosamaria Bitetti; Omar Barbiero
    Abstract: This paper investigates patterns in product market regulation across 34 OECD and 21 non-OECD countries, using an updated and revised version of the OECD’s indicators of product market regulation (PMR). The analysis shows that liberalisation of product markets has further slowed over the past five years. However, even though there was little progress on average in the OECD over this period, a number of OECD countries implemented sizable reforms, often in an attempt to boost economic growth in wake of the economic crisis. On average across the OECD, countries have made particular progress in abolishing price controls or improving their design, streamlining administrative procedures for start-ups, simplifying rules and procedures or improving access to information about regulations. Room for further improvements is the largest in the areas of public ownership and the governance of state-owned enterprises as well as with respect to barriers to competition in network and services sectors.<P>Mise à jour 2013 des indicateurs de réglementation des marchés de produits de l'OCDE : Aperçus des systèmes réglementaires dans les pays de l'OCDE et certains pays non membres<BR>Cette étude examine la réglementation du marché des produits à travers 34 pays de l'OCDE et 21 pays non membres de l'OCDE, en utilisant une version mise à jour et révisée des indicateurs de réglementation des marchés de produits (RMP) de l'OCDE. L'analyse montre que la libéralisation des marchés de produits a continué de se ralentir au cours des cinq dernières années. Cependant, même s'il y a eu peu de progrès en moyenne dans les pays de l'OCDE au cours de cette période, un certain nombre de ces pays ont mis en place des réformes non-négligeables, souvent dans le but d’augmenter la croissance économique à la suite de la crise économique. En moyenne dans l'OCDE, les pays ont fait des progrès en particulier concernant la suppression des mesures de contrôle des prix ou l'amélioration de leur conception, la simplification des procédures administratives concernant la création d’entreprises, la simplification des règles et des procédures ou l'amélioration de l'accès à l'information relative à la réglermentation. Les possibilités d’amélioration supplémentaire les plus importantes sont dans les domaines de la présence capitalistique de l’État et la gouvernance des entreprises publiques ainsi que dans les obstacles à la concurrence dans les secteurs de réseau et des services.
    Keywords: product market regulation, réglementation des marchés de produits
    JEL: K2 L2
    Date: 2015–03–31
  18. By: Ulku,Hulya; Muzi,Silvia
    Abstract: This paper analyzes recent trends in Sweden's labor market regulations in relation to comparator economies and examines the relationship between labor market regulations and outcomes. The paper finds that the Swedish labor market responded more rapidly to the recent global financial crisis than the majority of the European Union economies, which helped Sweden to recover quickly. Sweden's hiring regulations are more flexible than those of many comparator economies, however, fixed-term contracts of short duration might have adverse consequences for the economy. In addition, Sweden's regulations on work during the weekly holidays and mandatory paid annual leave are stricter than those of the majority of comparator economies. Moreover, among the economies of the Organisation for Economic Co-operation and Development, Sweden has one of the largest differences in employment protection between permanent and temporary employees, which could lead to a segmented labor market, where insiders enjoy high job security and outsiders are largely marginalized. This could be cause for concern, given that Sweden has a higher share of involuntary temporary workers among youth and involuntary part-time workers than both the Nordic and European Union averages. While protecting employees is important, excessive protection, particularly if it differs across different types of employment contracts, has been shown to have adverse effects on welfare and economic performance.
    Keywords: Labor Markets,Labor Policies,Markets and Market Access,Labor Management and Relations,Banks&Banking Reform
    Date: 2015–04–02
  19. By: Pavlicek, Jaroslav; Kristoufek, Ladislav
    Abstract: The online activity of Internet users has repeatedly been shown to provide a rich information set for various research fields. We focus on job-related searches on Google and their possible usefulness in the region of the Visegrad Group - the Czech Republic, Hungary, Poland and Slovakia. Even for rather small economies, the online searches of inhabitants can be successfully utilized for macroeconomic predictions. Specifically, we study unemployment rates and their interconnection with job-related searches. We show that Google searches enhance nowcasting models of unemployment rates for the Czech Republic and Hungary whereas for Poland and Slovakia, the results are mixed.
    Keywords: unemployment,Google Trends,nowcasting
    JEL: E24 E27 J64
    Date: 2015
  20. By: Thomas Leoni
    Abstract: The European welfare states have undergone a significant amount of change over the last decades. In light of the unresolved tensions resulting from changed macroeconomic conditions, the emergence of new social risks as well as from the consequences of the Great Recession and its aftershocks, more adjustments are needed. The present policy paper investigates the current outlook on welfare state change, retracing the socio-economic drivers of this change and the salient steps that were undertaken to reform welfare states in the last decades. Since the outbreak of the crisis, calls to adopt a social investment perspective on welfare state reform intensified, both in the academic field and at the EU policy-level. Ample space is therefore devoted to the discussion of this perspective, its conceptual background, ambiguities and applications. For a number of reasons, social investment seems the most appropriate approach to frame the objectives that contemporary welfare states have to pursue and to devise a consistent set of policies. The objections which have been moved against the social investment perspective have however to be taken seriously. This concerns the conceptual framework on which the social investment idea is based, but in particular its policy implementation and the relationship between its three central pillars: activation, human capital development and social inclusion.
    Keywords: Challenges for welfare system, Comprehensive social system, Demographic change, EU integration, European governance, Gender, Labour markets, Post-industrialisation, Welfare reform, Welfare state
    JEL: H5 I3
    Date: 2015–03

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